Tourism looking
up in ’04

Bookings from Japan are looking
strong for the first quarter despite
a drop in scheduled air seats

Sharon Weiner, quoting her boss Julian Levy, probably has the best way to explain the difference between 2003 and 2004 for the tourism industry.

"It's like being on the Titanic and just making sure you can survive as well as you can ... and you can't spend the time arranging the deck chairs, but this year, it seems we're not in that calamity situation, so we are arranging the deck chairs," said Weiner, group vice president of DFS Hawaii, a retailer that depends on Japanese travelers.

Japanese arrivals in the state have been on a long-term downward spiral since 1997, when 2.15 million people came here from Japan. Only 1.33 million are projected to have come in 2003.

State tourism officials are drawing the line in the sand, targeting a small rebound of 1.5 million Japanese arrivals in 2004, barring anymore catastrophic events.

Initial observations suggest that there's hope.

Japanese bookings for Hawaii in January, February and March are back near the 2000 level, and could bring an average of 5,000 arrivals each day, said Ryokichi Tamaki, vice president of Jalpak, a travel affiliate of Japan Airlines. That's a comeback, considering Japanese arrivals dipped by as much as 40 percent in the first half of the year because of the war with Iraq, SARS and other factors. Average daily Japanese arrivals in the first quarter of 2003 were in the 3,800 range.

Package tours are selling strong and prices are ridiculously competitive, Tamaki said.

Northwest Airlines said last month it will resume the daily Osaka-Honolulu service it suspended in October. The seasonal service will restart April 28, operating through the spring and summer from Kansai International Airport.

Still, scheduled airline seats from Japan to Hawaii in the first quarter are estimated to be down 17.5 percent from last year, and are even lower than the first quarter of 2002, which took a hit from 9/11, according to an analysis by the Hawaii Visitors & Convention Bureau. But the data does not include charter flights, which have recently replaced some suspended scheduled flights.

Tamaki worries about the recent discovery of mad cow disease in Washington state, which led Japan to ban imports of U.S. beef.

"The Japanese are very sensitive to those things," Tamaki said.

The sudden plunge of Japanese overseas travel because of SARS has led to wariness about what would pull the rug from under the industry again. It's been a tough two years of events, Weiner said.

Meanwhile, state tourism officials expect continuing, stable growth in Hawaii's U.S. mainland travelers, which came in greater numbers in 2003 from both the East and West coasts, despite the war in Iraq and the threat of terrorist strikes. That growth, weighed against a 10.5 percent year-over-year decrease in Japanese arrivals, led to an essentially flat year for total arrivals.

Arrivals from the U.S. West now represent a projected 42 percent of Hawaii's total travel market, while the U.S. East represents 29 percent. A slight average increase in the amount of time they were here boosted their total spending, making up for a 9.8 percent drop in spending by the Japanese. Total visitor spending is projected to hit $10.5 billion in 2003, up from $10 billion last year. The target for spending next year: a record $11.3 billion, a 7.6 percent increase.

Rex Johnson, chief executive of the Hawaii Tourism Authority, said the number is on the high side to serve as a stretch goal. The spending will rely on 6.74 million total arrivals, a level seen in 1999, and a 2.6 percent increase in daily per-person spending.

The state tourism authority is targeting increased visitor arrivals on all major islands, with a target of 7.4 percent on Oahu, where visitor arrivals are expected to fall 4.7 percent in 2003.

Also in 2004, Norwegian Cruise Line will add two U.S.-flagged interisland cruise ships in July and October. Cruise ships represent a small but growing sector of the industry.

The Conference Board predicts the U.S. economy will grow 5.9 percent in 2004. Another boost is the weakness of the U.S. dollar, which has declined 11 percent against the Japanese yen since July, and was recently close to &YEN107 per dollar, boosting Japanese spending power. Following 9/11, the yen was as weak as 135 to the dollar.

Tamaki said he thinks the yen may hit 105 to 103, but not as low as 100.

"Obviously it increases spending, but it also helps numbers of arrivals in Japan," Weiner said. Tourists know they're getting a better deal when they spend.



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